• I have a Queensland–China investments lunch-seminar on 23 November, where I will discuss the opportunities and risks for Qld’s property, tourism, agri and services sectors. The event in Brisbane is sponsored by HLB Mann Judd. Register now.

The foreign relations of China

1. ‘Speak softly and carry a big stick. You will go far,’ said US President Teddy Roosevelt. China’s big stick is its economy where more than 100 nations name China as their biggest trade partner.
2. Notice how China has diffused the South China Sea tensions by dealing unilaterally with Philippines, Vietnam and Malaysia in the past 12 months with economic sweeteners.
3. Or reminded the South Koreans (re US Thaad missiles) of the economic benefits of attracting (or not) mass Chinese tourists.
4. Its Belt and Road (B&R) Initiative will position China’s economic and political sphere of influence westwards into Central Asia and Eastern Europe, South and South-East Asia and East Africa/Middle East.
5. But ‘regime change’ risks will rise for the more unstable nations in this region, part of the ‘great game’ between rival super-powers if history is to repeat itself. This region is where China’s military will be first introduced to the world as it seeks to safeguard its economic interests in the B&R. (starting with military advisors to an emerging nation if civil war seems likely…sound familiar?).
6. Until recently, China has spoken softly on the world stage, but with Xi to host US President Trump in Beijing in November, expect an escalation of Xi’s ‘thoughts’ on the world’s challenges…that are obliquely aimed at trumping Trump and positioning Xi as a greater world leader in the coming years.

The economy of China

1. From now on, the environment will be costed as a domestic production input. So local costs will rise, the economy will slow, and the environment will gradually repair itself (the UK sacrificed its environment and its poor factory workers during its 1800s industrial revolution (recall Charles Dicken’s novels) while it built empires and amassed great wealth around the world…then over time, conditions improved for its poor and its environment…same for China).
2. Technology adoption and investment will rapidly increase as China seeks to limit the impact of a rapidly aging population. The nation has fewer corporate ‘vested interests’ so adoption of disruptive technology will be faster.
3. Chinese businesses will be told ‘go west’ for its Belt and Road Initiative or ‘go local’ to serve a growing domestic services economy. Businesses can invest in other global markets as long as there is a link back to fulfilling China’s B&R Initiative or local economy (eg agri imports for China’s middle class etc).
4. China’s debt load will be contained and slowly managed down, mostly out of public scrutiny (by pulling its state-capitalist levers of control). Most of the nation’s debt is domestic owned, so there is little risk of foreign investors being a catalyst for capital flight.

How Australia can benefit?

I will be discussing this on 20 November in Sydney and 23 Nov in Brisbane at my events.